A web auction/online auction is an auction which is held over the internet. Online auctions remove the physical limitations of traditional auctions such as geography, presence, time, space and target much wider audience. This arrival in reach ability has also made it easier to commit unlawful actions within an auction.
Web Auction is a simple auction designed for organizations or individuals who want to hold an auction. It is not like E-Bay in the sense that only Administrator can add products. Products can have pictures, price, minimum bids, bid increments, and more.
Definition and Examples:
Web Auction or Online Auction Online auctions are places that people can go in order to buy or sell goods or services online for a small fee. Anyone can sell an item and anyone can bid on an item. The highest bidder wins the auction and pay for the good or service and then expects to receive their winning in the next couple of days through the mail or some other way of delivery. The largest online auction website is E-Bay followed by other sites such as Yahoo ad Amazon. These sites allow ordinary web citizens to sell their goods.
The sale is generally based on a system of trust, but some people are finding profit in abusing the trust of others, while some are stretching the limits of the law via online auctions. Below is a listing of some of the major online auction sites on the Internet.
- Auction-Warehouse - http://www.auction-warehouse.com
- Craigslist - http://www.craiglist.org
- E-Bay – http://www.ubid.com
Online auctions are a widely accepted business model for the following reasons:
- No fixed time constraint
- Flexible time limits
- No geographical limitations
- Offers highly intensive social interactions
- Includes a large numbers of sellers and bidders, which encourages a high-volume online business
Online auctions include business to business (B2B), business to consumer (B2C), and consumer to consumer (C2C) auctions. E-Bay is the best example of an auction site that uses all three methodologies.
The online auction business model continues to evolve according to market needs. Examples include E-Bay, Web Store, Online Auction and Overstock. E-Bay and other providers encourage legitimate bidding activity through bidder block lists. E-Bay also offers Dutch auctions for large inventories, where auction bidders pay according to an item’s highest sale price.
Like other online services and activities, online auctions can attract stolen or pirated products.
Setting up an auction with Web Auction:
Setting up an auction with Web Auction is quick and simple. We can either host the auction on our own web server or set up our own auction on our servers for free. We have full control over our auction. We can create your own categories, set the start dates and end dates for our auction, select a custom header and footer, and enter the product categories that we want to have in our auction. Once the auction is installed and set up, we can begin adding the products immediately. Each product can have a minimum bid, open and close date, a photo, and a preferred bid increment associated with it.
Users of our auction can browse the products that are up for auction and submit the bids. The winner will receive an email when the auction is closed with instructions on how to proceed. In e auction is a service in which auction users or participants sell or bid for products or services via the Internet. Virtual auctions facilitate online activities between buyers and sellers in different locations or geographical areas. Various auction sites provide users with platforms Powered by Different types of Auction Software
An online auction is also known as a virtual auction.
Types of Online Auctions:
There are six different basic types of online auctions:
English auctions
In live terms, English auctions are where bids are announced by either an auctioneer or by the bidders and winners pay what they bid to receive the object. English auctions are claimed to be the most common form of third-party on-line auction format used and is deemed to appear the most simplistic of all the forms. The common operational method of the format is that it is an ascending bid auction in which bids are open for all to see. The winner is the highest bidder and the price is the highest bid.The popularity of the English auction is due to the fact that it uses a mechanism that people find familiar and intuitive and therefore reduces transaction costs.
Dutch auctions
Dutch auctions are the reverse of English auctions whereby the price begins high and is systematically lowered until a buyer accepts the price.
A Dutch auction operates with the auctioneer opening at a high price and then continuing to drop the price until a buyer bids on it. The first person to bid wins the auction.
. In a first price sealed-bid auction, you bid only once. It is a silent auction, and the bidders do not know who is placing bids or what the prices are. In a first-price sealed-bid auction, the item is awarded to the highest bidder. The main difference between this and English auctions is that bids are not openly viewable or announced as opposed to the competitive nature which is generated by public bids.
In a second-price sealed-bid auction (Vickrey auction), the item is awarded to the highest bidder, but at the second-highest price that was bid. This is done to alleviate bidders’ fears of significantly exceeding the item’s true market value.
Reverse auction
A reverse auction is an online bidding process in which suppliers can repeatedly bid their prices lower in order to win a purchase contract. This approach can result in substantial price reductions for the buyer. Depending on the type of reverse auction system used, the following information will be available to all bidders:
- Actual bid prices that have been submitted; or
- The relative rankings of the bidders, based on their prices submitted
Bids will continue until no one is willing to bid any lower, or until a predetermined expiration time is reached.
Reverse auctions are usually confined to situations in which the items needed are fully commoditized, with no differentiating features by supplier, and with industry-standard specifications.
A reasonable concern posed by suppliers is that reverse auctions excessively focus on price. When a supplier prefers to compete on other factors than price (such as fast order turnaround), it is at a disadvantage in a reverse auction. Also, the use of reverse auctions sends the message that there will be no attempt by a company to build relations with a specific supplier – it just wants the best price.
Reverse auctions are used predominantly in a business context for procurement.
Bidding fee auction
Penny auctions or bidding fee auction sites are a relatively new form of online buying. Participants enter an online auction to purchase heavily discounted goods and services, paying a non-refundable fee for every bid.
The price rises with each bid as participants try to purchase the discounted item. The last participant to bid when the time limit expires gets the item. However, the final bid is not the total cost; the total cost is the final bid price plus the cost of bidding.
Consumers should also be cautious of disreputable sites, which may use computer generated bidding (called ‘bots’) to drive the cost higher. Another practice called ‘shilling’ involves site operators using a third party to place dummy bids to drive the cost higher.
If you plan to take part in a penny auction, research the site you intend to use, ensure you read all of the terms and conditions carefully and keep the true cost in mind.
There has been criticism that compares this type of auction to gambling, as users can spend a considerable amount of money without receiving anything in return
Benefits of Online Auctions:
Online auctions hold two other potential benefits for small businesses, as well. First, buying and selling over the Internet can help expand the global reach of a small business, opening international markets that would have been impossible to reach via normal marketing channels.
Second, auctions can help new businesses-or those offering new products-to establish market prices based on supply and demand. Small businesses can use online auctions to gauges interest in their products and find out what customers are willing to pay.
Furthermore, companies can collect such information quickly and informally, rather than investing in time-consuming and expensive market research.
Titany answered the question on September 23, 2021 at 12:19